INVESTING FOR LONG-TERM SUCCESS
Do you want to be an investor or a gambler? The fact is that it can be hard to tell one from the other – unless you understand the analysis done to make the decision to buy (or sell) as well as the intention of the investor. At Griffin Black, we don’t want to gamble with our clients’ money. That means that we strive to make use of the latest research and analysis in finance, markets, and human behavior in order to build portfolios for clients that are financially sound as well as personally appropriate for them.
PERSONAL FINANCIAL STRATEGY
People frequently ask us: “How did your client’s portfolios do last year?” “Which one?” we reply. “The one invested for our 67-year old client’s ongoing retirement expenses? Or the 92-year old’s money that he doesn’t need but which is set aside for his kids to inherit some day? Or the 39-year old entrepreneur’s ‘safe’ money because the rest of his life is all risk and uncertainty?” Each of our client’s portfolios is different, because each client has a unique set of financial circumstances and life goals.
Once we understand what role each of our clients wants or needs her portfolio to play in her long-term financial plan, we can begin to build a portfolio to address those specific needs. For all portfolios, however, there are two, very important high-level questions to answer. The first is: what combination of the different kinds of investments available should be included in this portfolio? The second is: which specific securities, and in what proportion, should we buy to represent the different investment types? In finance-speak, we need to make decisions about portfolio construction and security selection.
For the portfolio as a whole, we focus on making client-appropriate choices for risk versus return, for liquidity, and for income versus capital gains.
When it comes to security selection, there is a growing body of research that supports the conclusion that certain kinds of stocks in particular – small companies, value companies, profitable companies – deliver superior returns over the long run. There is one company that has built a business around implementing the best academic research on financial markets and investment returns that has been done over the past 70 years. This company is Dimensional Fund Advisors. Dimensional (also known as DFA) has created a unique set of low-cost mutual funds that seek to deliver the benefits of this important research to the investing public. Griffin Black is pleased to partner with Dimensional and considers DFA funds to be a core component of our portfolios.